PG&E Liquidation Valuevalueplays
So, I got a question on PG&E on today’s podcast and gave my two cents on it.
I am also attending the Distressed Investing Conference on December 2nd in NYC that Peter Chapman is putting on.
These conferences are amazing and the GSE’s will surely be discussed.
Also being discussed? PG&E. Here is a summary of the idea for you and a link to register for the conference. They are also giving registrants free books.
It’s definitely worth going to this…. I can’t wait for it
Pacific Gas & Electric is making headlines again, and again for the wrong reasons. California’s biggest utility has shut off electricity for over 1 million people due to “dry, hot and windy weather.” The days with no power have made an even bigger villain out of the company, but their caution is understandable given their set to pay out tens of billions of dollars in damages for their wildfire liability which thrust the company into bankruptcy this year.
Meanwhile, PG&E’s stock (PCG:NYSE) has plunged this week on news that Judge Dennis Montali ruled that the company would not enjoy exclusivity in submitting a plan for reorganization. The competing plan will come from bondholders who have allied with wildfire victims in a struggle over control of the company.
With the stock price depressed, the biggest variable for how to value the company is how much money it will have to pay for property damage, injuries and deaths from wildfires caused by its equipment. The investor who can accurately determine that final number will be able to make a profit trading PG&E’s stock.
Pacific Gas & Electric recently reached a settlement with insurance companies worth $11 billion for its liability in 2018 wildfires that killed 85 people and destroyed thousands of homes. That provides something of a roadmap for the pending litigation to settle, but there is still enough uncertainty for there to be a spread between the current price and the real value.
If you want to bet on or against the current price, you’ll have to come up with a model to forecast the company’s wildfire liability.
The 26th Annual Distressed Investing Conference will feature a panel of experts who will explain how to do precisely that. On Mon., Dec. 2 at 2:20 p.m. in Midtown Manhattan, three veteran experts from the industries of litigation finance, financial advisory and credit rating will present their methodologies in developing a model and arriving at a final estimate.
Valuation Committee: Estimating PG&E’s Wildfire Liability
Philip W. Smyth of Fitch Ratings is responsible for credit analysis and ratings for U.S. electric utilities. Prior to joining Fitch in 2001, Philip was director of utility focus at Regulatory Research Associates, with primary responsibility for the company’s equity-based research product. Earlier, he was an analyst focusing on the utility industry at major buy- and sell-side institutions.
Emily Slater of Burford Capital structures and underwrites legal finance deals with high-value propositions. She has assessed thousands of cases and underwritten hundreds of millions in legal finance investments across a broad range of practice areas. Before Burford, Emily was a litigator at Debevoise & Plimpton LLP, where she specialized in complex securities and other bet-the-company litigation and regulatory investigations involving billions in damages.
Arik Van Zandt of Alvarez & Marsal specializes in the valuation of closely-held businesses operating in a variety of industries for purposes of litigation support, acquisitions, sales, buy-sell agreements, ESOPs, incentive stock options and estate planning and taxation. Arik also provides expert witness testimony in matters involving complex commercial disputes and performs economic analysis for personal injury claims, wrongful termination and wrongful death actions.
The perspectives of these three experts will provide an outline for you to value not only the equities of PG&E, but other distressed companies facing complex legal liabilities.
Dec. 2, 2019, 7:30 a.m. to 7 p.m.
The Harmonie Club, 4 E. 60th St., New York, N.Y.
The oldest event in distressed investing attracts hedge fund managers and institutional investors, investment bankers, financial advisers, turnaround managers, attorneys, reporters and more.
ValuePlays readers get a free book from our finance titles with your registration. Email Todd for more info.